What is the relationship between the gross domestic product of a country and its gross national product?
What will be an ideal response?
Gross domestic product of a country is the final value of all goods and services produced within the borders of a country, while gross national product is the final value of all goods and services produced by a country's factors of production during a particular year. Therefore, in order to obtain gross national product, the production of domestic factors of production within foreign borders needs to be added and the production of foreign factors of production within domestic borders needs to be subtracted from gross domestic product.
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An example of an externality occurs when a chemical factory
A) is producing ethanol and dumps waste in a river upstream from a popular fishing spot. B) produces fertilizers that do not help plants grow. C) produces fertilizers that kill plants rather than feed them. D) overworks its employees.
Which of the following correctly describes how an increase in the price level affects consumption spending?
A) An increase in the price level lowers real wealth, which causes consumption to decrease. B) An increase in the price level raises real wealth, which causes consumption to increase. C) An increase in the price level increases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase. D) An increase in the price level decreases the amount of money a household needs to buy goods and raises the interest rate, which causes consumption to increase.
In a competitive economy with no government sector: a. goods with spillover benefits will not be produced at all. b. there will be too few public goods produced
c. goods with spillover costs will be underproduced. d. too few resources be allocated to each industry.
Because reducing both unemployment and inflation simultaneously are conflicting goals:
A. aggregate demand policy will allow policymakers to achieve both objectives, but only if it is contractionary. B. aggregate demand policy will allow policymakers to achieve one of these objectives, but not both. C. there is a policy that will allow policymakers to achieve either objective. D. aggregate demand policy will allow policymakers to achieve both objectives, but only if it is expansionary.